Recorded RBI impact
Fine: Rs 3.00 L
Monetary penalty · Fresh imposition
Published by RBI
14 Feb 2022
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹3.00 lakh on The Vyavsaik Sahakari Bank Limited, Raipur, by order dated February 11, 2022. RBI said the bank failed to comply with directions on Exposure Norms and Statutory/Other Restrictions on UCBs and Board of Directors - UCBs. The inspection revealed excess inter-bank exposure and donations that were either linked to a trust where a director was interested or exceeded the prescribed limit. RBI stated the action was taken under the Banking Regulation Act, 1949, after considering the bank's reply and oral submissions.
Why RBI Acted
Based on an inspection as on March 31, 2020, RBI found that the bank exceeded the prudential inter-bank (gross) exposure limit, made a donation to a trust in which a director of the bank was interested, and made a donation in excess of the prescribed limit. RBI concluded these acts constituted contravention of / non-compliance with its directions on Exposure Norms and Statutory/Other Restrictions on UCBs and Board of Directors - UCBs, and imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the monetary penalty; no restriction on its ongoing operations is described in this release. The action signals regulatory non-compliance findings, but RBI explicitly notes it is not pronouncing on the validity of any customer transaction or agreement.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 3.00 L
- Order Date
- 11 Feb 2022
- Effective From
- 11 Feb 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank